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UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

TANGLER MEYERS,

on behalf of herself and others similarly

situated,

Plaintiff,

v.

FREEDOM CREDIT UNION,

Defendant,

v.

CREDITOR RESOURCES, INC.,

Third-Party Defendant.

CIVIL ACTION

No. 05-3526

Pollak, J. September 21, 2007

OPINION

Presently before the court are defendant Freedom Credit Union (“FCU”) and thirdparty defendant Creditor Resources, Inc.’s (“CRI”) motions to dismiss plaintiff Tangler

Meyers’s amended complaint for failure to state a claim on which relief can be granted. 

In addition, CRI has filed a motion to dismiss FCU’s third-party complaint against it, and

Meyers has filed a motion for class certification.

I. Facts Alleged

Tangler Meyers alleges that she applied for a loan from defendant FCU on June 8,

2004. FCU denied her application by letter dated June 9, 2004, and it notified her that its

decision was based at least in part on a credit report obtained from a company called

Credit Bureau Associates located at 1111 Woodcrest Road, Cherry Hill, NJ 08038, with a

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telephone number of 1-888-397-3742. Meyers alleges that this information was incorrect,

as there was no business of that name at that address and telephone number. She further

alleges that FCU received her credit data, if at all, from a company called Experian. This

error, according to Meyers, was repeated in multiple loan denials that she received from

FCU after June 8, 2004. 

Meyers is suing for a violation of 15 U.S.C. § 1681m(a)(2)(A), a provision of the

Fair Credit Reporting Act (“FCRA”), Pub. L. No. 91-508, 84 Stat. 1136 (1970). Section

1681m(a)(2)(A) requires that when a prospective creditor declines to extend credit to a

consumer on the basis of information received from a credit reporting agency, it must

provide the consumer with the name, address, and toll-free telephone number of the

agency. Meyers seeks class-action certification, as she alleges that she received a form

letter, and that many other consumers who sought and were denied credit from FCU were

similarly misinformed as to the true source of their credit data.

FCU has filed a third-party complaint against CRI, a company it alleges provided

and managed the computer program that produced the adverse action letters at issue. 

FCU alleges that CRI is liable in indemnity or contribution for any FCRA violation

caused by CRI’s software.

II. Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), defendants who so move are

entitled to the dismissal of complaints that “fail[] to state a claim on which relief can be

granted.” A court may only grant this relief if the allegations of the complaint do not

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“raise [the plaintiff’s] right to relief above the speculative level on the assumption that all

of the complaint’s allegations are true.” Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955,

1959 (2007). Keeping in mind that the rules of civil procedure require that a complaint

contain only a “short and plain statement of the claim showing that the pleader is entitled

to relief,” Fed. R. Civ. P. 8(a)(2), it need do no more than “‘give the defendant fair notice

of what the plaintiff’s claim is and the grounds upon which it rests.’” Swierkiewicz v.

Sorema N.A., 534 U.S. 506, 513 (2002) (quoting Conley v. Gibson, 355 U.S. 41, 47

(1957)). 

III. Motion to Dismiss Meyers’s Amended Complaint

The defendants’ motions to dismiss Meyers’s amended complaint present two

issues: (1) whether the 2003 Fair and Accurate Credit Transactions Act (“FACTA”), Pub.

L. No. 108-159, 117 Stat. 1952 (2003), which amended various sections of FCRA,

eliminated a private right of action for the conduct about which the plaintiff complains,

and (2) if so, whether that change affects the plaintiff’s right to proceed given that the

alleged violation occurred before FACTA took effect.

A. Whether FACTA eliminated private rights of action

Before Congress passed FACTA in 2003, it was beyond dispute that individual

consumers could sue prospective creditors for not providing the notice required by 15

U.S.C. § 1681m(a)(2)(A). This is because 15 U.S.C. §§ 1681n & 1681o provided private

rights of action for all willful (§ 1681n) and negligent (§ 1681o) violations of 15 U.S.C.

§§ 1681–1681x. 

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In FACTA, however, Congress added some language to § 1681m that the

defendants argue (and many courts agree) eliminated private rights of action as to that

section. Specifically, it added § 1681m(h). That subsection requires prospective

creditors to notify consumers when they offer credit on less favorable terms because of

the consumer’s credit history—a practice known as “risk-based pricing.” Under prior

law, only when prospective creditors denied credit altogether did they have to give such

notice. At the end of the new risk-based pricing rules, § 1681(h)(8) provides:

(A) No civil actions

Sections 1681n and 1681o of this title shall not apply to any failure

by any person to comply with this section.

(B) Administrative enforcement

This section shall be enforced exclusively under section 1681s of this

title by the Federal agencies and officials identified in that section.

As stated, §§ 1681n and 1681o are the sections that provide private rights of

action. Section 1681s provides for enforcement by the Federal Trade Commission. The

question presented is whether Congress intended these subparagraphs (eliminating private

rights of action and providing exclusively for administrative enforcement) to apply only

to the new risk-based rules in subsection (h) or to all of § 1681m. 

The defendants point out that in the world of federal legislative drafting, “section”

is—or at least is aspired to be—a term of art. See Koons Buick Pointiac GMC, Inc. v.

Nigh, 543 U.S. 50, 60 (2004) (noting that “Congress ordinarily adheres to a hierarchical

scheme in subdividing statutory sections”). According to the House Legislative

Counsel’s drafting manual, the basic units of titles of the United States Code are

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“sections.” U.S. House of Representatives Office of Legislative Counsel, House

Legislative Counsel’s Manual on Drafting Style, HLC 104–1, at 23–24 (1995)

[hereinafter House Manual]. “Sections” are divided into “subsections,” which are

preceded by lower-case letters in parentheses; “paragraphs,” which are preceded by

Arabic numerals in parentheses; “subparagraphs,” which are preceded by upper-case

letters in parentheses; and “clauses,” which are preceded by lower-case Roman numerals

in parentheses. Id. When Congress wishes to interpose new sections in the United States

Code between consecutive ones, it often designates the new sections with consecutive

lower-case letters following the original section number and not set off in parentheses. 

Thus, 15 U.S.C. § 1681a is the section that follows 15 U.S.C. § 1681, not a subsection of

15 U.S.C. § 1681. The first subsection of 15 U.S.C. § 1681 is 15 U.S.C. § 1681(a). The

House drafting manual recommends using the appropriate term of art in internal cross

references. Id. at 51–52. Under the assumption that Congress did so here, 15 U.S.C.

§ 1681m(h)(8)(A) must be read to retract private rights of action for violations of the

entire section, that is all of 15 U.S.C. § 1681m. Had it meant to retract private rights of

action only for violations of the new risk-based pricing rules in 15 U.S.C. § 1681m(h), it

would have used term of art “subsection.”

The defendants further note that Congress consistently used the hierarchical terms

of art appropriately throughout FCRA and FACTA. Indeed, even a cursory look at

§ 1681m reveals that Congress used the designations “section,” “subsection,”

“paragraph,” “subparagraph,” and “clause” throughout in accordance with their accepted

Case 2:05-cv-03526-LP Document 83 Filed 09/21/07 Page 5 of 20
 It is worth noting that when Congress references more than one unit of the Code, it uses 1

the designation of the senior unit. See, e.g., 15 U.S.C. § 1681m(b)(2)(B) (referring to “section

1681a(k)(1)(A)),” not subparagraph 1681a(k)(1)(A); (e)(2)(A) (referring to “paragraph (1)(A),”

not subparagraph (1)(A)); see also House Manual, at 52 (“If the reference is to more than 1 unit,

the reference is to the senior unit. Thus, refer to section 5(a)(1) and not paragraph 5(a)(1).”).

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meanings. See, e.g., 15 U.S.C. § 1681m(a)(2)(A)(I) (referring to “clause (ii)”); 1681m(c)

(referring to “section” in a provision that can only logically apply to entirety of § 1681m);

1681m(h)(3) (referring to “subsection (a)”); 1681m(h)(6)(B) (referring to “subparagraph

(A)”); 1681m(h)(6)(B)(v) (referring to “paragraph (1)”).1

But Meyers argues there is more to the story. Specifically she claims that the

structure, history, and purpose of FACTA all weigh against the defendants’ reading. As

to structure, she argues that if Congress had meant to extinguish private rights of action

for all of § 1681m, it would have given the relevant provision its own subsection, not

tucked it into the end of the subsection delineating new risk-based pricing rules. The

defendants, on the other hand, note that in putting the extinguishing provision in

subsection (h)(8), Congress put it at the very end of § 1681m, which, they contend, makes

sense. I agree with Meyers that placing the provision within the new risk-based pricing

rules is perhaps strange, but nothing prevents Congress from doing so, and I find it

difficult to read much into the placement of the provision in this instance.

FACTA’s history, however, gives more pause. At the beginning of the first

session of the 108th Congress, the House and Senate proposed competing versions of

what would become FACTA—both proposing wide-ranging amendments to FCRA. The

House version did not address risk-based pricing. See generally H.R. 2622, 108th Cong.

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 The Senate amended H.R. 2622 to replace all of the text with the language of the 2

Senate’s version, S. 1753, 108th Cong. (2003), before passing it. 149 Cong. Rec. S13980 (daily

ed. Nov. 5, 2003). 

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(as passed by the House, Sept. 10, 2003). The Senate version did: section 311 of the

Senate bill created a new subsection of § 1681m to require notice when a consumer’s

credit data garnered a less advantageous price. See H.R. 2622 § 311, 108th Cong. (as

passed by the Senate, Nov. 5, 2003). Neither chamber receded to the other’s version, 2

and so a conference committee was convened. See 149 Cong. Rec. S13994 (daily ed.

Nov. 5, 1003) (Senate requests conference); H10514 (daily ed. Nov. 6, 2003) (House

agrees to conference).

At conference, the committee retained § 311 of the Senate bill (and thus decided to

require notice in risk-based pricing situations), but it tacked on two new provisions: 15

U.S.C. § 1681m(h)(7) & (8). H.R. 2622, 108th Cong. § 311 (as proposed by conference

committee, Nov. 23, 2003). Unlike the other subsections of § 311 of the Senate bill,

which properly reference the various subdivisions of the Code, the conference-proposed

paragraphs are puzzling. First, paragraph (7), which purports to excuse violations of “this

section” where the violator maintained reasonable policies and procedures, is superfluous. 

Another provision of 15 U.S.C. § 1681m, subsection (c), already made the reasonableprocedure defense applicable to all of § 1681m. This defense, therefore, would have been

applicable to new subsection (h) no matter what. Second, paragraph (8), the provision at

issue here, is puzzling because it, somewhat out of the blue, purports to eliminate

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decades-old private rights of action in a subsection concerned only with risk-based

pricing.

One could certainly tell a compelling story that the conference committee, in

trying to find a compromise between the Senate’s inclusion of risk-based pricing rules

and the House’s exclusion of them, settled on including them with two provisos: (1) the

(h)(7) recognition of the reasonable-procedure defense, and (2) the (h)(8) provisions

declining to extend private rights of action to enforce the new rules. Moreover, bearing in

mind the rush in which conference amendments are generated, one could believe that

these new paragraphs were not as artfully drafted as the rest of subsection (h), and thus

confusingly used the term “section” to refer only to new subsection (h) (also known as

“section” 311 of the proposed bill). But one could also tell a story that the conference

committee settled on a different compromise—one that would adopt the risk-pricing rules

in return for eliminating private rights of action for all violations of § 1681m. In this

story, the language used in subsection (h)(8) was purposeful and consistent with

Congress’s usual drafting procedures.

The legislative history provides few clues as to which story is closer to the truth. 

The conference committee did not comment on § 311 of the reported bill, see generally

H.R. Rep. 108-396 (2003), nor did anyone comment substantively on it on the floor of

either chamber. Thus, the contours of the compromise are undiscoverable in the pages of

the Congressional Record.

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Meyers notes that it would be odd for Congress to wipe away private rights of

action that had existed for decades without so much as a peep, and, indeed, the Supreme

Court on occasion has invoked this “dog that did not bark” canon of interpretation. See,

e.g., Koons, 543 U.S. at 63; Chisolm v. Roemer, 501 U.S. 380, 396 n.23 (1991). But it is

well-within Congress’s power to enact a sweeping change without comment, so courts

must be careful not to read more into Congressional silence than is warranted. See, e.g.,

Harrison v. PPG Indus., Inc., 446 U.S. 578, 592 (1980) (cautioning against reading into

Congressional silence). Indeed, it is not hard to imagine that members of Congress—as

politicians—might on occasion have an interest in not explaining themselves at great

lengths. Here, reading deeply into Congress’s silence on the risk-based pricing issue

would be unwise, as the conference committee declined to elaborate on any of the

compromises it struck. See generally H.R. Rep 108-396. Thus, silence on the added

provisions to FACTA § 311 is consistent with the committee’s broader choice not to

elaborate on any of its work, which is, of course, its prerogative.

Finally, Meyers argues that the purpose of FACTA was to expand consumers’

rights, not to retract them. It is true that the committee reports claim that the central

purpose of FACTA was to enhance consumer protection. See, e.g., H.R. Rep. 108-263

(2003), at 1 (describing the Act’s purposes as “to prevent identity theft, improve

resolution of consumer disputes, improve the accuracy of consumer records, [and] make

improvements in the use of, and consumer access to, credit information”). I do not find

these general statements of purpose helpful here because, in light of the history just

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discussed, it is clear that the House and Senate struck a compromise with regard to the

risk-based pricing rules in which the pro-consumer side gave some ground. What I must

discern are the precise contours of that compromise, and statements of general purpose do

not illumine that question.

In the end, I cannot make my way around the language of the statute to arrive at

Meyers’s position. Because Congress was so consistent in using the hierarchical words of

art in the rest of § 1681m—and indeed the rest of FCRA—I conclude that it did likewise

in paragraph (h)(8). While it is possible that Meyers’s interpretation is what the Congress

and the conference committee intended, it is not what they wrote. Given the primacy of

text and structure in statutory interpretation, Meyers’s theory about its drafting history is

not supported by enough evidence to overcome the most natural reading of the text. See

Lamie v. United States Tr., 540 U.S 526, 534 (2004) (relying on statutory text because,

though it was “awkward, and even ungrammatical,” its meaning was plain).

I note that almost all of the courts that have examined this aspect of the 2003

amendments of FCRA have come to similar conclusions. See, e.g., Perry v. First Nat’l

Bank, 459 F.3d 816, 823 (7th Cir. 2006); Soroka v. JP Morgan Chase & Co., ___ F.

Supp. 2d ___, 2007 WL 895249, at *6 (S.D.N.Y. Mar. 19, 2007); White v. E-Loan, Inc.,

409 F. Supp. 2d 1183, 1187 (N.D. Cal. 2006). But see Barnette v. Brook Road, Inc., 429

F. Supp. 2d 741, 749 (E.D. Va. 2006).

B. Whether the elimination of a private right of action is retroactive

Case 2:05-cv-03526-LP Document 83 Filed 09/21/07 Page 10 of 20
 Congress delegated to the Board of Governors of the Federal Reserve System and the 3

Federal Trade Commission the task of setting the statute’s effective date. See FACTA § 3. 

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Meyers alleges that she received the offending letter in June 2004. FACTA took

effect on December 1, 2004, and Meyers brought suit in July 2005. Meyers argues that

because her cause of action accrued before FACTA took effect, FACTA should not bar it. 

Her contention is that FACTA does not apply retroactively under the Supreme Court’s

analysis in Landgraf v. USI Film Prods., 511 U.S. 244 (1994) and Hughes Aircraft Co. v.

U.S. ex rel. Schumer, 520 U.S. 939 (1997). Landgraf provide a two-step test for

determining whether a statute should apply retroactively. Landgraf, 511 at 280. First, a

court must determine whether Congress expressly provided for the temporal reach of the

statute. Id. If so, the court should —within the bounds of the Constitution—apply the

statute accordingly. Id. If not, the court should determine whether applying the statute

retroactively would have unfair effects, such as imposing liability or new obligations on

completed conduct, or impairing rights a party thought it possessed when it acted. Id. If

so, then the statute should not apply retroactively, and if not, it should. Id. 

As an initial matter, the defendants argue that the Landgraf analysis is

inappropriate here because FACTA was signed into law on December 4, 2003, some

months before June 2004 when the conduct at issue took place. They acknowledge that

the statute did not come int force until after the conduct was completed, but they advance

the position that the general rule against applying statutes retroactively is based on

fairness and notice concerns and that these do not come into play in the temporal gap

between the enactment of a statute and its effective date. I find defendants’ position 3

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Those agencies brought FACTA § 311(a) (15 U.S.C. § 1681m(h)) into force on December 1,

2004. 12 C.F.R. § 222.1(c)(2)(xiii). 

 Indeed, some courts, as well as Sutherland’s treatise, have reasoned that the 4

legislature’s setting an effective date later than the date of enactment provides good evidence

that it intends the statute to have only a prospective effect. See, e.g., People v. Floyd, 72 P.3d

820, 824 (Cal. 2003); Wright v. Dir., Fed. Emergency Mgmt. Ass’n, 913 F.2d 1566, 1572 n.13

(11th Cir. 1990); Dion v. Sec’y of Health & Human Servs., 823 F.2d 669, 672 (1st Cir. 1987);

Norman J. Singer, 2 Sutherland Statutes & Statutory Construction § 41:4 (6th ed. 2000).

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unpersuasive. While it is the case that, at the time of the alleged conduct, the plaintiff

was, in a formal sense, on notice that a new statute had been passed, it is also the case that

she was, in a formal sense, on notice that the new statute had yet to take effect. One

would not ordinarily expect to be governed by a law that, though on the books, Congress

had not yet brought into force. Therefore, applying the FACTA amendments to conduct

that occurred before the amending statute’s effective date raises the concerns of fair

notice and settled expectations that the Supreme Court addressed in Landsgraf and that

undergird the anti-retroactivity principle. See 511 U.S. at 270 (noting that the antiretroactivity principle is based on “familiar considerations of fair notice, reasonable

reliance, and settled expectations”).4

“When a case implicates a federal statute enacted after the events in suit, the

court’s first task is to determine whether Congress has expressly prescribed the statute’s

proper reach.” Id. at 280; accord Hughes Aircraft Co., 520 U.S. at 946. Here, the

defendants argue that Congress did so in FACTA § 312(f), which states:

Nothing in this section, the amendments made by this section, or any other

provision of this Act shall be construed to affect any liability under section

616 or 617 of the Fair Credit Reporting Act [15 U.S.C. §§ 1681n & 1681o]

that existed on the day before the date of enactment of this Act.

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 My colleague on this court, Judge O’Neill, has also read FACTA § 312 this way. See 5

Miller v. Corestar Fin. Group of Penn., No. 05-5133, 2007 WL 419194, at *3 (E.D. Pa. Feb. 5,

2007).

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This is a clear statement that Congress did not intend FACTA to apply to conduct prior to

the date of its enactment. The statement, however, does not address the gap between the

statute’s enactment and the date on which it took effect. Defendants argue, by negative 5

implication, that in stipulating that the statute does not apply to pre-enactment conduct,

Congress must have intended that the statute apply to post-enactment-but-pre-effectivedate conduct. However, Landgraf counsels against applying a statute retroactively

without a “clear expression of Congressional intent.” 511 U.S. at 264. The negative

implication of FACTA § 312 may be an indicator of Congress’s intent, but it is far from a

clear expression of it. I therefore proceed to step two of the Landgraf analysis.

Without a clear statement of whether a statute is to apply retroactively, a court

“must determine whether the new statute would have a retroactive effect, i.e., whether it

would impair the rights a party possessed when he acted, increase a party’s liability for

past conduct, or impose new duties with respect to transactions already completed.” 

Landgraf, 511 U.S. at 280. Defendants argue that the statute would have no such effect

because the underlying duty—to provide the prospective borrower with correct

information about the source of credit data used to take adverse action against her—is

unchanged. See Crowder v. PMI Mortgage Ins. Co., No. 06-0114, 2006 WL 1528608, at

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*5 (M.D. Ala. May 26, 2006). Rather, all that has changed, according to the defendants,

is the enforcement mechanism. 

Defendants understate the change. Section 1681n—not available to postamendment would-be § 1681m plaintiffs—allows pre-amendment plaintiffs to recover

compensatory damages, punitive damages, and attorneys fees for willful violations. See

15 U.S.C. § 1681n(a) & (c). Section 1681o—also not available to post-amendment

would-be plaintiffs—allows pre-amendment plaintiffs to recover compensatory damages

for negligent violations. 15 U.S.C. § 1681o(a). Section 1681s, which is now the

exclusive means of enforcing § 1681m, does not allow for compensatory or punitive

damages; rather, it allows the Federal Trade Commission to assess a civil penalty of up to

$2,500 per violation, and then only if the violation is part of a “pattern or practice” of

violations. See 15 U.S.C. § 1681s(a)(2). Thus, the substance of the liability equation has

changed dramatically. 

Perhaps more to the point, from Meyers’s perspective, the change is severe. 

Before FACTA came into force, she had a contingent right to recover from defendants for

her alleged injuries. Post-FACTA, that right is eliminated. The Supreme Court held in

Hughes Aircraft that when Congress eliminates a defense to a cause of action, the change

impairs a party’s rights, and thus should not apply retroactively without a clear expression

that Congress intended for it to do so. 520 U.S. at 950. As a number of courts have held,

eliminating an entire cause of action is at least as serious a change in a person’s settled

expectations as eliminating a defense. See Grab v. Am. Lawyers Co., No. 05-00812, 2007

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WL 842045 (D. Haw. Mar. 19, 2007), at *7; Panko v. Discover Fin. Servs., 458 F. Supp.

2d 580, 585 (N.D. Ill. 2006); Miller, 2007 WL 419194, at 4; see also Mathews v. Kidder,

Peabody & Co., 161 F.3d 156, 165–66 (Becker, C.J.) (“In Hughes, the Court concluded

that retrospective application of the FCA Amendment would have the legal effect of

depriving the defendant of a particular defense, and that this constituted a retroactive

effect. In the case at bar, retrospective application of the RICO Amendment would have

the legal effect of depriving plaintiffs of a claim, which also constitutes a retroactive

effect.” (citation omitted)).

In sum, applying FACTA retroactively would significantly impair Meyers’s preexisting right to recover for her alleged injuries. Because Congress has not clearly

expressed its intent that the statute apply retroactively, I conclude that Congress did not

intend the statute to do so. Therefore, FACTA’s elimination of a private right of action

does not bar Meyers’s claim, and I will deny the defendants’ motions to dismiss.

IV. CRI’s Motion to Dismiss FCU’s Third-Party Complaint

Soon after Meyers filed suit against FCU, FCU in turn filed a third-party complaint

against CRI. In its third-party complaint, FCU alleges that CRI “provided and managed”

the computer program that produced the allegedly offending adverse-action letters, ThirdParty Compl. ¶ 8, and it asks for relief in the form of contribution or indemnity, id. ¶ 9. 

CRI has moved to dismiss on the grounds that it cannot be liable for FCU’s FCRA

violations under applicable law. As CRI argues, the question whether indemnification or

contribution is available is one of federal, not state, law. See Nw. Airlines, Inc. v. Transp.

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 Although the Northwest Airlines opinion dealt only with contribution, I agree with the 6

various courts of appeals that have held that its reasoning applies with equal force to claims for

indemnity. See, e.g., Mortgages, Inc. v. U.S. Dist. Ct. for the Dist. of Nev., 934 F.2d 209, 212

n.3 (9th Cir. 1991); Levit v. Ingersoll-Rand Fin. Corp., 874 F.2d 1186, 1191–92 (7th Cir. 1989);

Green v. U.S. Dep’t of Labor, 775 F.2d 964, 971 (8th Cir. 1985). 

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Workers Union of Am., AFL-CIO, 451 U.S. 77, 90 (1981). In addition, CRI is correct 6

that neither will lie unless authorized by the statute itself or by federal common law. Id. 

As to the statute: It is clear that FCRA does not expressly create a cause of action for

indemnity or contribution. And the Third Circuit has admonished that, as a general

matter, those causes of action are not to be implied where, as here, the statute otherwise

creates a detailed remedial scheme. Bowers v. Nat’l Collegiate Athletic Ass’n, 346 F.3d

402, 425 (3d Cir. 2003). Thus, I conclude that FCRA does not—expressly or

impliedly—authorize an action for indemnity or contribution. See, e.g., McSherry v.

Capital One FSB, 236 F.R.D. 516, 522 (W.D. Wash. 2006); Connor v. Howe, 344 F.

Supp. 2d 1164, 1171 (S.D. Ind. 2004); Kay v. First Continental Trading, Inc., 966 F.

Supp. 753, 754–55 (N.D. Ill. 1997).

As to federal common law: A claimed cause of action for contribution or

indemnity is not cognizable under federal common law unless such a cause of action

would implicate a “‘uniquely federal interest,’” Tex. Indus., Inc. v. Radcliff Materials,

Inc., 451 U.S. 630, 642 (1981) (quoting Banco National de Cuba v. Sabbatino, 376 U.S.

398, 426 (1964)), or unless Congress can be deemed to have delegated to the courts the

power to “create governing rules of law.” Id. Neither is the case here. Much as in Texas

Industries, the only federal interest in contribution or indemnification is the vindication of

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federal statutory rights, but because that interest “does not involve the duties of the

Federal Government, the distribution of powers in our federal system, or matters

necessarily subject to federal control even in the absence of statutory authority,” it is

insufficient to ground a federal common law cause of action. Id. Similarly, FCRA

contains no delegation to the courts of the power to create additional or supplementary

liabilities.

Rather than challenging CRI’s statements of law, FCU claims that it will establish

liability on a contractual theory. In support it cites Yohay v. City of Alexandria

Employees Credit Union, 827 F.2d 967 (4th Cir. 1987). That case is puzzling because it

applied a state-law indemnity standard to FCRA without addressing the Northwest

Airlines/Texas Industries holdings at all. Id. at 973. Moreover, the standard it applied

was not based on any contract between the parties; it was, rather, based on principles of

restitution. See White v. Johns-Manville Corp., 662 F.2d 243, 249 (4th Cir. 1981)

(describing indemnity as a “restitutionary principle”) (cited in Yohay, 827 F.2d at 973). 

Because I cannot square the Yohay Court’s approach with Northwest Airlines and Texas

Industries, I decline to follow it. See Kudlicki v. MDNA, Inc., No. 05-2589, 2006 WL

1308617, at *3 (N.D Ill. May 10, 2006) (declining to apply state-law indemnity claim to

FCRA violation); McMillan v. Equifax Credit Info. Servs., 153 F. Supp. 2d 129, 132 (D.

Conn. 2001) (expressing doubt that Yohay was decided correctly).

This is not to say that FCU could not pursue a state-law breach of contract action if

its contract with CRI contained some sort of warranty or indemnity provision. Northwest

Case 2:05-cv-03526-LP Document 83 Filed 09/21/07 Page 17 of 20
 I am relying on Pennsylvania law, as neither party has suggested that any other state’s

7

law would apply to this action. 

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Airlines and Texas Industries appear to bar only off-the-contract actions for indemnity

and contribution, as neither case mentions an allegation of contract-based contribution. I

have previously ruled that FCRA does not occupy the field of regulating transactions

between consumers and prospective creditors, and that only state causes of action

inconsistent with it are preempted. Hughes v. Firedlity Bank, 706 F. Supp. 639, 640–41

(E.D. Pa. 1989); accord Davenport v. Farmers Ins. Group, 378 F.3d 839, 842–43 (8th

Cir. 2004). It is certainly arguable that allowing a prospective creditor to shift its liability

by contract would not conflict with Congress’s purpose, as the prospective creditor’s

primary liability would still give it a significant interest in complying with the law. See

United States v. QVC, Inc., No. 04-1276, 2005 WL 327550, at *1 (E.D. Pa. Feb. 8, 2005)

(reaching similar conclusion with regard to the Federal Trade Commission Act). On the

other hand, it would seem that indemnification should not be available, even by contract,

if the prospective creditor commits a willful violation of FCRA. See Globus v. Law

Research Servs., Inc., 418 F.2d 1276, 1288 (2d Cir. 1969) (refusing to enforce contractual

indemnity clause when underwriter has willfully violated securities laws). 

Stating a claim for breach of contract requires, at the least, alleging the existence

of a contract, including its essential terms, and how it was breached. Kane v. State Farm 7

Fire & Cas. Co., 841 A.2d 138, 1042 (Pa. Super. Ct. 2003). Here, all FCU has alleged is

that CRI “provided and managed” software. Third-Party Compl. ¶ 7. That

characterization is insufficient for FCU’s action to proceed on a breach-of-contract

Case 2:05-cv-03526-LP Document 83 Filed 09/21/07 Page 18 of 20
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theory, as it alleges neither existence of a contract, nor the essential terms of that contract,

nor how CRI breached it. Because FCU has not adequately pleaded a breach-of-contract

claim, I will dismiss its complaint.

At the end of its response to CRI’s motion to dismiss, FCU suggests that it can

amend its complaint to allege a viable cause of action. I note that in our circuit properly

requesting leave to amend a complaint requires attaching a draft of the amended version. 

Fletcher-Harlee Corp. v. Pote Concrete Contractors, Inc., 482 F.3d 247, 253 (3d Cir.

2007). Because FCU has not done so, I will not construe its suggestion as a formal

request for leave to amend. Nevertheless, it would seem appropriate to provide FCU the

opportunity to bring a breach-of-contract claim if it can do so. Therefore, I will dismiss

its third-party complaint and will, mea sponte, grant FCU leave to amend its complaint by

Monday, November 5, 2007.

V. Motion for Class Certification

Meyers filed a motion for class certification early in this litigation. Briefing on

that motion has been stayed for many months now, so the motion is not yet ripe for

disposition. It is, however, time to lift the stay and set a new briefing schedule. 

Therefore, I will give FCU until Monday, November 5, 2007 to file a response, and

Meyers until Monday, December 10, 2007 to file a reply. An appropriate order follows.

Case 2:05-cv-03526-LP Document 83 Filed 09/21/07 Page 19 of 20
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UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

TANGLER MEYERS,

on behalf of herself and others similarly

situated,

Plaintiff,

v.

FREEDOM CREDIT UNION,

Defendant,

v.

CREDITOR RESOURCES, INC.,

Third-Party Defendant.

CIVIL ACTION

No. 05-3526

AND NOW, this day of September, 2007, for the reasons stated in the

accompanying opinion, it is hereby ORDERED:

(1) the defendants’ motions to dismiss the plaintiff’s amended complaint are

DENIED;

(2) third-party defendant Creditor Resources’ motion to dismiss third-party

plaintiff Freedom Credit Union’s third-party complaint is GRANTED, and

that complaint is DISMISSED; third-party plaintiff Freedom Credit Union

is GRANTED leave to amend its third-party complaint by November 5,

2007;

(3) defendant Freedom Credit Union shall file any response to plaintiff’s

motion for class certification by November 5, 2007; plaintiff shall file any

reply by December 10, 2007.

BY THE COURT:

/s/ Louis H. Pollak

____________________

Pollak, J.

Case 2:05-cv-03526-LP Document 83 Filed 09/21/07 Page 20 of 20